Next Generation Supply Management Defined

Menu

ASG Software Proves the Peter Principle

There’s a reason “leaders” generally only account for a small percentage of the total market (no more than 30%, and usually only 10%). That reason is the Peter Principle which says that in a hierarchy, every employee tends to rise to his level of incompetence. In other words, your average company will continue to promote its “rising stars” through the executive ranks until they implode into black holes and suck the company down with them.

As proof that these “rising stars” are promoted until they implode into black holes at your average company, I offer up this press release from ASG Software which describes the results of a commissioned Enterprise Management Associates study of IT and business executives that found that two-thirds of executives say dashboards deliver clear financial advantage.

In other words, it found that two-thirds of respondents were brain-dead corporate zombies who thought that dangerous and dysfunctional dashboards were a money saving tool — even though I’ve told them twice how dangerous and dysfunctional the average dashboard was. The reality is that, even in the best case where the dashboard is properly designed to show you what’s not working, where data is missing, and where you need to investigate performance, it’s not going to save you money. It’s just going to point out where you need to take action to improve performance and save money.

However, you have to determine the action to take and then you have to take the action … and, more than likely, you will have to apply another tool (which will likely cost money) to take that action. Now, if you select the right action, the right tool for the action, and implement the action properly, then you will improve performance and reduce operational costs and, over all, save more than you spend buying the tool … but these savings will not be the result of the dashboard. They will be the result of the appropriate tool and / or your action.

And, furthermore, if you decide to rely solely on the dashboard to judge overall corporate health, it will end in disaster. All a properly designed dashboard can tell you is that there are no problems of documented types. It can’t tell you that there are no problems of undocumented types. For example, it can tell you that the production line is still pumping out finished units within an acceptable range on a weekly basis. It can’t tell you that no one has bothered to properly service the one-of-a-kind robot arm in over a year, even though it’s supposed to be serviced every three months or 30,000 units, and that it’s 30 units from a major lock-up that will cause it to self destruct and shut the production line down for at least a month. And while it can tell you that your new phone is still selling within the forecasted range, it can’t tell you that sales are about to drop 80% next week because the market is going to suddenly prefer your competitor’s new product coming out next week that the model didn’t account for. The false sense of security the dashboards provide will, if you’re not careful, lull your business into an eternal sleep.